This quarterly report represents an earnings surprise of -42.86%. A quarter ago, it was expected that this operator of members-only luxury hotels and clubs under the Soho House brand would post a loss of $0.01 per share when it actually produced break-even earnings, delivering a surprise of 100%. Soho House & Co (SHCO) came out with a quarterly loss of $0.10 per share versus the Zacks Consensus Estimate of a loss of $0.07. This compares to loss of $0.10 per share a year ago. These figures are adjusted for n ...

Financial Performance - Total revenues for Q4 2024 were $305.6 million, representing a 5.4% year-over-year growth[4] - Total revenues for fiscal year 2024 reached $1,203.8 million, a 7.0% year-over-year increase[4] - Membership revenues increased to $109.3 million, a 15.6% year-over-year increase[4] - Membership revenues for fiscal year 2024 were $418.0 million, up 17.2% year-over-year[4] - Net loss attributable to Soho House & Co Inc. was $91.7 million, or $0.47 per share, including $51.6 million in non-cash FX losses[4] - Net loss for the fiscal year ended December 29, 2024, was $163,568 thousand, compared to a loss of $129,678 thousand for December 31, 2023, representing a 26% increase[28] - Net loss attributable to Soho House & Co Inc. was $91,685, compared to a loss of $61,360 in the previous year, reflecting a 49.3% increase in losses[33] - Operating loss for the fiscal year ended December 29, 2024, was $70,041 thousand, a significant increase of 97% compared to a loss of $35,593 thousand for December 31, 2023[29] Adjusted EBITDA - Adjusted EBITDA for Q4 2024 was $32.3 million, with an adjusted EBITDA margin of 11%[11] - Adjusted EBITDA increased by 14% to $131,904 thousand for the fiscal year ended December 29, 2024, from $115,605 thousand in the previous year[28] - Adjusted EBITDA for the 13 weeks ended December 29, 2024, was $32,292, a slight decrease of 1% from $32,525 in 2023[24] Membership and Expansion - Total Soho House members grew to 212,447, a 9.6% increase year-over-year[11] - Three new Soho Houses were successfully opened in 2024: Portland, Sao Paulo, and Mews House[4] - House Membership Revenues are primarily derived from annual membership fees and one-time legacy registration fees, with the latter amortized over 20 years[38] - The total number of Soho Houses in operation reflects the company's expansion strategy, with a focus on increasing membership and revenue[42] - Membership revenues are influenced by the number of members, membership mix, and pricing, with higher prices generally in North America compared to the UK and Europe[50] - The company reported strong member retention rates, indicating robust demand and loyalty among members[45] Expenses and Losses - House-Level Contribution for the 13 weeks ended December 29, 2024, was $60,725, a decrease of 5% compared to $64,113 for the same period in 2023[25] - House-Level Contribution Margin decreased to 27% from 30% year-over-year[25] - In-House operating expenses increased by 11% to $164,102 for the 13 weeks ended December 29, 2024, compared to $147,817 in 2023[27] - General and administrative expenses rose by 7% to $152,922 thousand in the fiscal year ended December 29, 2024, compared to $143,583 thousand in the previous year[29] - Total operating expenses rose to $376,211, an increase of 18.5% from $317,506 in the prior year[33] Cash and Debt - The company ended Q4 2024 with cash and cash equivalents of $156 million[13] - Net debt increased by 5% to $672,553 thousand as of December 29, 2024, compared to $640,859 thousand as of December 31, 2023[32] - The current portion of debt increased by 18% to $34,618 thousand as of December 29, 2024, from $29,290 thousand as of December 31, 2023[32] - Cash and cash equivalents decreased to $152,716 from $159,155, a decline of 4.3%[35] Foreign Exchange and Impairment - Foreign exchange gain for the 13 weeks ended December 29, 2024, was $51,645, compared to a loss of $(32,297) in 2023[27] - The company recognized impairment losses of $13,567 on long-lived assets and intangible assets for the 13 weeks ended December 29, 2024, a 72% decrease from $47,772 in 2023[27] - The company recognized impairment losses of $32,345 thousand on long-lived assets for the fiscal year ended December 29, 2024, down 32% from $47,772 thousand in the previous year[29] - The company recognized a loss of $6,204 thousand on goodwill related to certain reporting units during the fiscal year ended December 29, 2024[28] Shareholder Activities - A third-party consortium has made an offer to take the company private for $9.00 per share, currently under assessment[8] - The company incurred expenses related to shareholder activism amounting to $1,885 thousand during the fiscal year ended December 29, 2024[28] Digital Engagement - Active App Users are defined as unique users who have logged into membership Apps within the last three months, highlighting engagement with digital platforms[53] Forward-Looking Statements - Forward-looking statements indicate expectations for financial performance in fiscal 2024, subject to risks and uncertainties that may affect actual results[55]

Membership and Growth - As of December 29, 2024, Soho House & Co has approximately 271,500 members, including around 212,400 Soho House members[18]. - The global waitlist for membership stands at over 112,000 applicants as of December 29, 2024[22]. - Soho House membership fees are approximately $5,200 annually, providing access to all Houses globally[33]. - The Cities Without Houses membership has 12,518 members across 84 cities as of December 29, 2024, with planned openings in Portland, USA (March 2024) and Sao Paulo, Brazil (June 2024)[34]. - Soho Friends membership reached 53,110 members as of December 29, 2024, with an annual fee of approximately $130[34]. - Soho Works has 5,984 members as of December 29, 2024, with membership fees ranging from $200 to $750 per month for Soho House members[36]. - The company increased its total House count to 45 in fiscal 2024, up from 42 in fiscal 2023, with plans for two to three new openings in 2025[42]. - In fiscal 2024, over one million non-member guests visited the Houses, with a goal to convert them into members[45]. - The company plans to expand its presence in new and existing markets, focusing on establishing Houses in key cultural cities and integrating complementary products and services[105]. Financial Performance - The company incurred net losses of $164 million, $130 million, and $223 million in fiscal years 2024, 2023, and 2022, respectively, with an accumulated deficit of $1,540 million as of December 29, 2024[80]. - The company incurred a consolidated net loss of $164 million during fiscal 2024, despite generating positive cash flows from operations of $90 million[103]. - The company is dependent on distributions from subsidiaries to cover taxes and operating expenses, which may be restricted by existing credit facilities[115]. - Inflation could adversely affect the company's financial condition and results of operations, as it may not be able to adjust member pricing accordingly[120]. - The company has an outstanding debt balance of $983 million as of December 29, 2024, which includes Senior Secured Notes and other loans[124]. Operational Strategy - The company has adopted an asset-light development model for new House openings, significantly reducing initial investment costs to $2 million to $8 million[26]. - For openings not following the asset-light model, initial investments are expected to be in the $10 million to $20 million range[26]. - The company continues to explore new openings on a case-by-case basis to balance member experience and optimize returns[25]. - The company has historically invested significantly in opening new Houses and enhancing membership experiences, which may continue to incur higher expenses than anticipated[80]. - The company is exposed to foreign currency exchange rate risk due to operations in non-US countries, particularly the UK, with no current hedging arrangements in place[109]. Market and Competitive Position - The company believes it has a first-mover advantage in the private membership club sector, creating significant barriers to entry for competitors[63]. - The company faces challenges in maintaining and expanding its international operations due to risks such as exchange rate fluctuations and differing protection of intellectual property rights[108]. - The company has experienced significant growth in its business activities, which places demands on its administrative and operational resources[83]. Regulatory and Compliance Risks - The company is subject to extensive environmental, health, and safety regulations across all operating regions, which may impact operational costs and compliance efforts[70]. - The company is subject to regulatory scrutiny regarding data privacy, which may necessitate changes in business operations and incur additional compliance costs[169]. - The company may incur substantial costs due to compliance with privacy laws and potential litigation from privacy-related claims[176]. - The company faces risks related to compliance with the US Foreign Corrupt Practices Act and the UK Bribery Act, which could result in severe penalties if violated[190]. Brand and Reputation - The company’s brand value is critical to attracting and retaining members, and any incidents that damage its reputation could adversely affect its business[86]. - The company has faced brand squatting issues in regions like South America and Asia, complicating trademark registration efforts[93]. - The company has not been able to protect its trademarks in significant jurisdictions such as China and Mexico, which may lead to brand dilution and customer confusion[94]. Technology and Cybersecurity - The reliance on information technology systems is critical, and any failure could harm business operations and reputation[155]. - Cybersecurity risks are a significant concern, with potential for data breaches that could lead to negative publicity and financial impact[159]. - The implementation of new technology systems, such as the Enterprise Resource Planning (ERP), may cause operational disruptions and increased costs[158]. - The complexity of IT systems increases vulnerability to security breaches, which could disrupt business operations and damage customer relationships[168]. Labor and Employment - The company faces risks from unionization efforts, particularly in regions with strong labor rights focus[183]. - The company is subject to various employment laws and may face claims related to employment discrimination and wage-hour issues[184]. - The company may face challenges in hiring qualified employees necessary for compliance with financial reporting regulations, impacting its operational effectiveness[199]. Governance and Control - The Voting Group controls approximately 96.6% of the combined voting power of the outstanding common stock, significantly limiting other stockholders' influence on corporate matters[204]. - The company qualifies as a 'controlled company' under NYSE rules, allowing it to rely on exemptions from certain corporate governance requirements[210]. - Certain directors have affiliations with Yucaipa, which may lead to conflicts of interest affecting the company's business decisions[211].

Core Viewpoint - Bleichmar Fonti & Auld LLP is investigating Soho House & Co. Inc. for potential breaches of fiduciary duty by its board of directors and controlling stockholder, Ron Burkle, due to concerns over a third-party acquisition offer that may undermine minority stockholders' rights [1][4]. Group 1: Investigation Details - The investigation is prompted by Soho House being controlled by Ron Burkle and the Yucaipa Companies, which hold 62.3% of the voting power, allowing them to influence corporate actions without minority stockholder approval [2][3]. - A third-party consortium has offered to acquire all outstanding shares of Soho House for $9.00 per share, contingent on Burkle and Yucaipa rolling over their equity interests, raising concerns about conflicts of interest [3][4]. Group 2: Concerns for Minority Stockholders - There are serious concerns that the sales process may not yield fair value for minority stockholders, as the board may favor the interests of controlling stockholders [4]. - The lack of indication that the acquisition offer requires approval from a special committee or minority stockholders suggests that their rights may be overlooked in the transaction [3][4].

Core Viewpoint - Bleichmar Fonti & Auld LLP is investigating Soho House & Co. Inc. for potential breaches of fiduciary duty by its board of directors and controlling stockholder [1]. Group 1: Investigation Details - Soho House is primarily controlled by Ron Burkle and his affiliated companies, the Yucaipa Companies, which hold 62.3% of the total voting power of the Company's stock [2]. - A third-party consortium made an offer to acquire all outstanding shares of Soho House for $9.00 per share, contingent upon Burkle and Yucaipa rolling over their equity interests [3]. - Concerns have been raised regarding conflicts of interest that may undermine the rights of minority stockholders, as the offer does not appear to require approval from a special committee or minority stockholders [3]. Group 2: Potential Issues - BFA believes the sales process managed by the board may not ensure fair value for minority stockholders, potentially favoring the interests of controlling stockholders [4]. - The investigation aims to determine if the directors, officers, and controlling stockholders are breaching their fiduciary duties by conducting a sales process that disadvantages minority stockholders [4].

Membership and Revenue Growth - Membership Revenues and In-House Revenues are interrelated, with the majority of In-House Revenues generated by members, and pricing is identical for both members and non-members[225] - Cities Without Houses membership has 11,879 members across 83 cities as of September 29, 2024, with new Houses opened in Bangkok, Mexico City, Portland, and Sao Paulo, and planned openings in Manchester and Milan[228] - Soho Friends membership has 53,235 members as of September 29, 2024, with an annual fee of approximately $130, and the company plans to grow this membership brand in a measured way[228] - Soho Works membership has 6,181 members as of September 29, 2024, with membership rates ranging from $200 to $750 per month depending on location and Soho House membership status[228] - Membership revenues for the 13 weeks ended March 31, 2024, were revised to $98.949 million, down from the previously reported $100.191 million, reflecting a decrease of $1.242 million[242] - Membership revenues for the 13 weeks ended June 30, 2024, were revised to $102.347 million, down from the previously reported $103.584 million, reflecting a decrease of $1.237 million[242] - Membership revenues for the 39 weeks ended September 29, 2024 were $308.690 million, an 18% increase compared to the same period in 2023[322] - Membership revenues increased by 17% to $107,394 for the 13 weeks ended September 29, 2024, driven by an 11% increase in Adult Paying Members[334] - Membership revenues in the United Kingdom segment increased by 17% to $4,707 for the 13 weeks ended September 29, 2024, driven by a 5% increase in Adult Paying Members[334] - The Americas segment saw a 17% increase in membership revenues, driven by new Soho Houses in Mexico City, Portland, and Sao Paulo[366] - Global waitlist for SHCO membership stands at approximately 111,000 applicants as of September 29, 2024[283] - Annual membership fee for Every House access is approximately $4,800, excluding local sales taxes[286] - Membership growth, retention rates, and periodic fee increases are key drivers of profitability, with strong member loyalty evidenced by high retention rates and wait lists[262] Financial Revisions and Misstatements - The company revised its Fiscal 2023 and Fiscal 2022 consolidated financial statements and Q2 2024, Q1 2024, Q3 2023, Q2 2023, and Q1 2023 unaudited condensed consolidated financial statements due to identified misstatements[236] - Misstatements in North America segment balance sheet reconciliations resulted in an understatement of net loss of $5 million in Fiscal 2022 and $7 million in Fiscal 2023, and an overstatement of net assets of $6 million as at Fiscal 2022 and $12 million as at Fiscal 2023[237] - Misstatements in Soho Home sale transactions resulted in an understatement of net income of $2 million in Fiscal 2022 and less than $1 million in Fiscal 2023, and an understatement of net assets of $2 million as at Fiscal 2022 and $2 million as at Fiscal 2023[237] - Misstatements in Soho Works embedded lease accounting resulted in an overstatement of Membership revenues and Other operating expenses of $5 million in Fiscal 2023, $1 million in Q1 2024, and $1 million in Q2 2024[237] - Misstatements in revenue recognition of exclusivity and incentive fees resulted in an overstatement of Other revenues of $6 million in Q3 2023 and Fiscal 2023, and an understatement of deferred revenues of $6 million as at Q3 2023 and as at Fiscal 2023[237] - Misstatements in income tax (expense) benefit resulted in an overstatement of the income tax (expense) of $4 million in Q1 2024 and $5 million in Q2 2024, with a cumulative impact of $9 million on net income[237] - The company identified misstatements in previously issued financial statements, but determined the impacts were not material[400] Financial Performance and Metrics - Total revenues for the 13 weeks ended March 31, 2024, were revised to $261.944 million, down from the previously reported $263.146 million, reflecting a decrease of $1.202 million[242] - In-House operating expenses for the 13 weeks ended March 31, 2024, were revised to $151.471 million, down from the previously reported $151.629 million, reflecting a decrease of $158,000[242] - Net loss attributable to Soho House & Co Inc. for the 13 weeks ended March 31, 2024, was revised to $41.559 million, down from the previously reported $46.040 million, reflecting an improvement of $4.481 million[242] - Total revenues for the 13 weeks ended June 30, 2024, were revised to $302.947 million, down from the previously reported $305.146 million, reflecting a decrease of $2.199 million[242] - In-House operating expenses for the 13 weeks ended June 30, 2024, were revised to $163.979 million, up from the previously reported $162.884 million, reflecting an increase of $1.095 million[242] - Net loss attributable to Soho House & Co Inc. for the 13 weeks ended June 30, 2024, was revised to $29.899 million, down from the previously reported $33.869 million, reflecting an improvement of $3.970 million[242] - Net loss for the year ending December 31, 2023, was $(1,360,365) thousand, with a total shareholders' deficit of $(150,627) thousand[249] - Accumulated deficit as of December 31, 2023, stood at $(1,360,365) thousand, reflecting a significant financial burden[249] - Non-cash share-based compensation for the year ending December 31, 2023, amounted to $18,875 thousand[249] - Net change in cumulative translation adjustment for the year ending December 31, 2023, was $(24,853) thousand[249] - Total shareholders' deficit attributable to Soho House & Co Inc. as of December 31, 2023, was $(158,367) thousand[249] - Net income (loss) for the quarter ending March 31, 2024, was $(46,040) thousand, with a total shareholders' deficit of $(185,394) thousand[249] - Non-cash share-based compensation for the quarter ending March 31, 2024, was $7,336 thousand[249] - Net change in cumulative translation adjustment for the quarter ending March 31, 2024, was $4,088 thousand[249] - Total shareholders' deficit attributable to Soho House & Co Inc. as of March 31, 2024, was $(192,983) thousand[249] - Net income (loss) for the quarter ending June 30, 2024, was $(33,869) thousand, with a total shareholders' deficit of $(225,819) thousand[249] - Net loss for the 39 weeks ended September 29, 2024 was $42,362 thousand, compared to $41,450 thousand for the same period in 2023[250] - General and Administrative Expenses increased by $9,389 thousand (9%) to $112,770 thousand for the 39 weeks ended September 29, 2024, driven by business expansion costs including five new Soho Houses[29] - Other expenses increased by $12,113 thousand to $13,738 thousand for the 39 weeks ended September 29, 2024, primarily due to one-time expenses and strategic reorganization costs[31] - House-Level Contribution Margin improved to 28% for the 13 weeks ended September 29, 2024, up from 26% in the same period in 2023[304] - Adjusted EBITDA increased to $48,281 thousand for the 13 weeks ended September 29, 2024, compared to $35,055 thousand in the same period in 2023[304] - Total revenues for the 39 weeks ended September 29, 2024 were $898.259 million, an 8% increase compared to the same period in 2023[321] - In-House revenues for the 39 weeks ended September 29, 2024 were $358.213 million, a slight increase of $1.351 million compared to the same period in 2023[323] - In-House Operating Expenses for the 39 weeks ended September 29, 2024 were $474.240 million, an increase of $29.582 million compared to the same period in 2023[326] - Pre-opening expenses for the 39 weeks ended September 29, 2024 were $13.958 million, a 3% decrease compared to the same period in 2023[329] - House-Level Contribution Margin was 26% for the 39 weeks ended September 29, 2024, an increase of 1% from the prior period[327] - Other revenues in The Americas segment increased $686 thousand, or 4%, versus the 13 weeks ended October 1, 2023[336] - House-Level Contribution for the 39 weeks ended September 29, 2024 was $167.717 million, an increase of $16.822 million compared to the same period in 2023[351] - Depreciation and amortization increased by $2,480 (3%) to $76,642 for the 39 weeks ended September 29, 2024, driven by IT development costs and new Soho Houses, partially offset by reductions at Soho Works sites[354] - The company recognized $14,068 in impairment losses on long-lived assets, with $13 million related to Soho Works North America[355] - Total revenues increased by 8% to $898,259 for the 39 weeks ended September 29, 2024, with membership revenues up 18% to $308,690[361] - General and administrative expenses increased by $4,108 (12%) to $39,672 for the 13 weeks ended September 29, 2024, due to business expansion costs[364] - Adjusted EBITDA increased by 16% to $99,612 for the 39 weeks ended September 29, 2024, representing 11% of total revenues[356] - Interest expense, net increased by 4% to $61,846 for the 39 weeks ended September 29, 2024, representing 7% of total revenues[331] - The company recognized $14,068 in impairment losses on long-lived assets for the 13 weeks ended September 29, 2024, primarily related to Soho Works North America[341] - Net interest expense for the 39 weeks ended September 29, 2024, increased by $2,319 (4%) to $61,846, driven by higher interest rates and principal on the Soho Beach House Miami loan and Senior Secured Notes[359] - In-House revenues for the 13 weeks ended September 29, 2024, increased by $5,435 to $120,658, supported by four new Houses opened since October 1, 2023[363] - Pre-opening expenses for the 39 weeks ended September 29, 2024, decreased by $411 (3%) to $13,958, driven by timing of expenses for new House openings[357] - Other operating expenses for the 39 weeks ended September 29, 2024, increased by 7% to $206,015, with a constant currency increase of 4%[367] - Adjusted EBITDA for the 13 weeks ended September 29, 2024, increased by 38% to $48,281, with a constant currency increase of 31%[369] - Operating income for the 39 weeks ended September 29, 2024 was $615 thousand, compared to a loss of $8,072 thousand in the same period last year[374] - General and administrative expenses increased by 9% to $112,770 thousand for the 39 weeks ended September 29, 2024[374] - House-Level Contribution increased by 11% to $167,717 thousand for the 39 weeks ended September 29, 2024[374] - Net cash provided by operating activities was $62,794 thousand for the 39 weeks ended September 29, 2024, compared to $28,690 thousand in the same period last year[378] Operational and Strategic Developments - The company issued 949 shares of Class A common stock subsequent to September 29, 2024 due to SARs being exercised[254] - The company has observed a secular shift in living and working patterns, with increased demand for curated communities[257] - Foreign exchange risk is mitigated by natural hedging as income and supplier payments for UK and European operations are in Pound sterling or Euros[452] - Average Daily Rate (ADR) is a key performance indicator, representing average rental income per paid occupied room[301] - The company operates approximately 1,500 hotel rooms across The LINE and Saguaro hotels in the Americas[287] - In-House Revenues increased by 5% year-over-year to $120.7 million for the 13 weeks ended September 29, 2024[308] - The Americas segment saw a 6% increase in In-House Revenues to $46.6 million for the 13 weeks ended September 29, 2024[308] - United Kingdom segment's Other Revenues increased by 8% to $1.5 million in Q3 2024, driven by higher design fees[310] - Other Contribution Margin improved to 24% in Q3 2024, up from 23% in Q3 2023[312] - Pre-opening expenses decreased by 50% to $2.6 million in Q3 2024 compared to Q3 2023[314] - Share-based compensation expense decreased by $1.2 million to $3.5 million in Q3 2024[316] - Adjusted EBITDA for the 13 weeks ended September 29, 2024 was $48.281 million, a 38% increase compared to the same period in 2023[319] - Europe/RoW segment saw a decrease in In-House revenues by $117 thousand year-on-year, with a 5% decrease in constant currency[335] - The Americas segment's Other Contribution increased by 58% to $12,738 for the 39 weeks ended September 29, 2024, compared to the same period in 2023[367] - The company repurchased 3,160,175 shares of Class A common stock for $17 million during the 39 weeks ended September 29, 2024[377] - The company is exposed to commodity price risks, particularly for foodstuffs, natural gas, and oil[390] - The company is exposed to foreign exchange risk in Pound sterling and Euros, with significant operations in the UK, Americas, and Europe[384] - If the USD had strengthened/weakened by 10% versus the GBP, revenue for the 13 weeks ended September 29, 2024, would have been approximately $6 million lower and $7 million higher, respectively[385] - If the Euro had strengthened/weakened by 10% versus the GBP, revenue for the 39 weeks ended September 29, 2024, would have been approximately $13 million higher and $11 million lower, respectively[387] - If the USD had strengthened/weakened by 10% versus the GBP, revenue would have been approximately $47 million lower and $52 million higher, respectively, for the 39 weeks ended September 29, 2024[396] Internal Controls and Risk Management - The company identified material weaknesses in internal control over financial reporting, including insufficient personnel with GAAP expertise and ineffective IT general controls[395] - Management concluded that disclosure controls and procedures were not effective as of September 29, 2024 due to material weaknesses in internal control over financial reporting[400]

Group 1 - Soho House & Co (NYSE: SHCO) announced its quarterly results, which included confirmation of a buyout offer, leading to a nearly 50% increase in the company's share price in one day [1] - The significant appreciation in share price indicates strong market reaction to the buyout offer, reflecting investor confidence in the company's future prospects [1] Group 2 - The company operates with a focus on diversification across different investment portfolios, emphasizing the importance of having separate strategies for income, growth, and options plays [2] - The investment philosophy includes a long-only approach, avoiding short positions, and utilizing various options strategies such as covered calls and iron condors to manage risk and enhance returns [2] - The analysis and writing focus on stocks and funds that the company owns or plans to own, ensuring alignment with investment goals [2]

Financial Data and Key Metrics Changes - Total revenues for Q3 2024 grew 14% year-on-year to $333 million, accelerating from 3% growth in Q1 and 5% in Q2 [25] - Membership revenue rose 17% year-on-year to $107 million, while in-house revenues increased by 5% and other revenues grew by 22% [25] - Adjusted EBITDA for Q3 was $48 million, up 38% year-on-year, with margins increasing approximately 250 basis points year-over-year [28] - Net income was positive in the quarter, improving from a loss of $49 million in Q3 2023 [17] Business Line Data and Key Metrics Changes - Membership demand continued to grow, with 4,000 new members added, bringing the total to approximately 208,000 globally [12] - In-house revenues saw a slight year-on-year growth of 5%, with like-for-like sales growth in the UK, Europe, and the rest of the world, while North America lagged slightly [14][27] - House level contribution increased by $9 million or 17% year-on-year, with house level margins up approximately 150 basis points to 28% [26] Market Data and Key Metrics Changes - Like-for-like in-house revenues for the quarter improved slightly year-on-year, contrasting with flat growth in Q2 [27] - Europe and the rest of the world experienced the strongest like-for-like growth, followed by the UK, while the Americas saw a slight decline [27] Company Strategy and Development Direction - The company continues to focus on growing and enhancing membership and operational excellence to deliver greater profitability [11] - A strategic review was initiated to enhance shareholder value, with a third-party consortium offering $9 per share, which the Board is currently evaluating [8][9] - The company is investing in back-of-house operations and technology, including a new cloud-based ERP system to improve efficiency and scalability [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a choppy revenue environment but emphasized strong membership revenue as a stabilizing factor [16][40] - The company is tempering expectations for in-house and other revenue due to weaker demand trends observed in late 2024 [38] - Despite challenges, management remains optimistic about membership loyalty and growth, which are foundational to the business [40] Other Important Information - The company ended the quarter with $147 million in cash and cash equivalents and $686 million in net debt, with a net debt to adjusted EBITDA ratio of 5 times [36] - The company has revised its total revenue guidance to approximately $1.2 billion, down from a previous range of $1.2 billion to $1.25 billion [38] Q&A Session Summary Question: Can you discuss the guidance change and the $21 million reduction in EBITDA? - Management indicated that about half of the guidance change is due to one-time factors and does not expect to recur [47][51] Question: What were the notable differences in like-for-like sales by region? - Management noted a slowdown in the UK and US in October, with a bounce back in November, while Europe remained consistent [53] Question: Can you elaborate on the strategy behind the opening of Mews House? - The company is pleased with the success of Soho Mews House and is considering similar elevated houses in New York and Ibiza [54][56] Question: What is the timeline for clarity on the strategic alternatives? - Management refrained from commenting on the specifics of the offer and timeline for the review [61] Question: Have you seen an uptick in bookings post-election? - Management reported a positive trend in bookings for Q1 2025, particularly in Bodrum, indicating a recovery in demand [64] Question: Will 2025 be an investment year due to ERP initiatives? - Management confirmed that 2025 will involve continued investment in ERP, with expectations for improved efficiencies and flow-through thereafter [72][74]

Earnings Performance - Soho House reported break-even quarterly earnings per share, compared to the Zacks Consensus Estimate of a loss of $0.01 and a loss of $0.22 per share a year ago [1] - The quarterly report represents an earnings surprise of 100% [2] - Over the last four quarters, the company has surpassed consensus EPS estimates once [3] Revenue Performance - Soho House posted revenues of $333.37 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.37% [3] - Year-ago revenues were $300.96 million [3] - The company has topped consensus revenue estimates two times over the last four quarters [3] Stock Performance - Soho House shares have lost about 31% since the beginning of the year, compared to the S&P 500's gain of 23.1% [5] Earnings Outlook - The current consensus EPS estimate is $0.03 on $329.45 million in revenues for the coming quarter and -$0.38 on $1.23 billion in revenues for the current fiscal year [9] - The estimate revisions trend for Soho House is favorable, translating into a Zacks Rank 2 (Buy) [8] Industry Context - Soho House belongs to the Zacks Internet - Software industry, which is currently in the top 13% of the 250 plus Zacks industries [10] - The top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [10] Peer Comparison - Penguin Solutions, Inc (PENG) is expected to post quarterly earnings of $0.40 per share, representing a year-over-year change of +66.7% [11] - The consensus EPS estimate for Penguin Solutions has been revised 25.8% lower over the last 30 days [11] - Penguin Solutions' revenues are expected to be $317 million, up 15.6% from the year-ago quarter [12]

Financial Performance - Total revenues for Q3 2024 reached $333.4 million, representing a 13.6% year-over-year growth from Q3 2023[3]. - Adjusted EBITDA for Q3 2024 was $48.3 million, up $13.2 million from Q3 2023, with an adjusted EBITDA margin of 14%[3][5]. - Net income for the 13 weeks ended September 29, 2024, was $718, a significant improvement from a net loss of $(48,433) in the same period last year[20]. - Total revenues increased to $333,368, up 14% from $293,387 in the prior year[27]. - Adjusted EBITDA rose to $48,281, reflecting a 38% increase compared to $35,055 in the previous year[20]. - Operating income for the quarter was $37,884, compared to a loss of $(27,386) in the prior year[24]. - The company recognized $14 million in impairment losses on long-lived assets, primarily related to Soho Works North America[20]. - General and administrative expenses increased by 12% to $39,672, compared to $35,564 in the previous year[24]. Membership Growth - Membership revenues increased to $107.4 million, a 16.7% rise year-over-year, accounting for 32.2% of total revenues[3]. - Total members grew to 267,494, up 4.8% year-over-year, with Soho House members increasing to 208,078, a 13% year-over-year growth[3][6]. - The membership waitlist remains at approximately 111,000, indicating strong demand[3]. - The number of active users on the SH app increased to 212,993, up from 187,759 year-over-year[6]. Revenue Breakdown - In-House revenues increased to $120,658, up 5% from $115,223 in the previous year[27]. - Other revenues reached $105,316, a 22% increase compared to $86,115 in the same period last year[27]. - Membership revenues for the fiscal year were $272,809,000, unchanged from previous reports, indicating stable membership performance[41]. - In-house revenues increased to $427,209,000 after adjustments, showing a growth of 0.1%[41]. Financial Adjustments and Misstatements - The Company identified misstatements resulting in an understatement of net loss of $5 million in Fiscal 2022 and $7 million in Fiscal 2023, with additional impacts in Q1 and Q2 2024[31]. - Misstatements related to Soho Home sale transactions led to an understatement of net income by $2 million in Fiscal 2022 and less than $1 million in Fiscal 2023[32]. - The Company recognized an overstatement of Other revenues by $6 million in Q3 2023 and Fiscal 2023 due to incorrect revenue recognition practices[32]. - Adjustments to the income tax expense resulted in an overstatement of $4 million in Q1 2024 and $5 million in Q2 2024, cumulatively impacting net income by $9 million[32]. - The Company has determined that the misstatements did not result in material misstatements for previously presented financial statements but will impact the consolidated financial statements for the 52-week period ending December 29, 2024[34]. Operational Improvements - The company is implementing a new ERP system to enhance internal controls and support strategic growth initiatives[29]. - The ongoing remediation plan includes enhancing accounting staff skills and increasing the number of personnel in the finance department, particularly in the Americas[37]. - The Company will continue to engage with external consultants to strengthen internal controls and processes[37]. Market Expansion - As of September 29, 2024, Soho House & Co operates 45 Soho Houses and 8 Soho Works globally, indicating ongoing market expansion[48]. - The company emphasizes its unique position as the only company to have scaled a private membership network with a global presence since its inception in 1995[48]. - The company has a diverse portfolio that includes various hospitality and lifestyle brands, enhancing its market reach and member engagement[48].